Martin Winterkorn, the former chief executive of the German auto maker Volkswagen, has been charged in Germany over his involvement in the company’s diesel emissions scandal.
The public prosecutor in Braunschweig
charged him and four other managers with fraud.
The auto maker said it would not
comment on the indictments.
Martin Winterkorn, 71, is already
facing criminal charges in the US, but is unlikely to face trial, as Germany
does not extradite its citizens.
He resigned soon after the so called
Dieselgate scandal erupted in September 2015.
In a statement, prosecutors accused
Martin Winterkorn of a “particularly serious” fraud, as well as a
breach of competition laws.
They said the former VW boss should
have alerted car owners and authorities in Europe and the US about the
manipulation of diesel emissions tests sooner.
They also accused Martin Winterkorn
of approving a “useless” software update designed to conceal the true
reason for the cars’ higher emission levels.
If found guilty, Martin Winterkorn
could face a prison sentence of up to 10 years.
Prosecutors did not name the other
four senior managers charged.
VW first admitted in September 2015
that it had used illegal software to cheat US emissions tests.
The devices, which allowed cars to
perform better in test conditions than they did on the road, were installed on
almost 600,000 vehicles sold in the US from 2009 though 2015 and millions more
globally.
They came to light after a study of
emissions by researchers at West Virginia University in the US.
The Dieselgate scandal sparked
investigations in Germany and other countries.
To date, the emissions scandal has
cost Volkswagen roughly €28 billion, ($31 billion).
Last month, the US Securities and
Exchange Commission (SEC) sued VW and Martin Winterkorn, accusing the company
of “massive fraud” over the emissions scandal.
The SEC claims VW misled investors
by issuing billions of dollars worth of bonds and securities, without
disclosing that it had cheated emissions tests.
VW said it would contest the SEC lawsuit vigorously.
VW has overtaken Toyota to become the world’s best-selling automaker.
This is the first time the German company has held the position.
Toyota, which had topped sales for the past four years, sold 10.175 million vehicles globally in 2016.
That fell short of the 10.31 million sales which VW reported last week.
The milestone comes despite Volkswagen’s scandal over emissions tests cheating, which sparked a global backlash and multiple lawsuits.
Volkswagen, which makes the Audi, Porsche and Skoda brands, saw a 3.8% increase in sales buoyed by demand in China.
Toyota’s sales grew by 0.2% – though it appears to have suffered from a slowdown in the US car industry.
GM reports its figures next week, but it is expected to lag both Toyota and VW.
General Motors was the world’s third-largest automaker in 2015. It held the number one title in 2011 after Toyota’s production was hit by a massive earthquake and tsunami in north-eastern Japan.
Toyota has overtaken VW in global vehicle sales after releasing figures for the first nine months of 2015.
The Japanese automaker sold 7.5 million in the first three quarters of 2015, beating VW’s 7.43 million and General Motors’ 7.2 million.
After six months of 2015, VW was ahead of Toyota, in pole position for the first time.
VW’s emissions scandal emerged towards the end of September.
The discovery of software that was able to mislead emissions tests on diesel cars may have more effect on VW’s sales in the remainder of the year.
Toyota’s sales for the first nine months were 1.5% below the level at the same stage last year.
Toyota first overtook GM to take the top slot in 2008 and has kept it every year since, except 2011 when GM was the top seller after a tsunami in north-eastern Japan disrupted Toyota’s production.
Separately, there was relief for General Motors on October 25 when it reached an agreement with the United Auto Workers union, averting a threatened strike.
Details of the four-year labor deal were not released. It will now go to a vote of UAW leaders and then the union’s 52,700 workers at GM.
“We believe that this agreement will present stable long-term significant wage gains and job security commitments to UAW members now and in the future,” said UAW president Dennis Williams.
The union had threatened that it would terminate its existing contract at midnight Eastern time on October 25, meaning there could have been a strike.
Porsche ex-CEO Wendelin Wiedeking and ex-finance chief Holger Haerter have gone on trial in Germany accused of market manipulation over a failed Volkswagen takeover bid.
Wendelin Wiedeking and Holger Haerter are accused of having given “false information” to investors.
Defense lawyers for the former executives have described the accusations as “unfounded”.
The failed bid opened the door to Porsche’s takeover by Volkswagen.
Between March and October 2008, Porsche issued several public denials that it was planning to raise its stake in VW to 75% and take over the company.
However, prosecutors said it was actually in the process of building up its shares in VW.
When Porsche announced it was planning to acquire enough of VW’s stock to take it over, Volkwagen’s share price shot up, and investment funds which needed to buy VW stock to settle their trading positions found none was available.
Then Porsche’s takeover bid failed, and left the sports car maker with €10 billion of debt.
VW launched a takeover of Porsche in turn, initially acquiring 49.9% of the sports car maker in 2009, before announcing in August 2012 that it had completed the acquisition.
Volkswagen has apologized after US regulators found some of its cars disguised pollution levels.
VW CEO Martin Winterkorn said: “I personally am deeply sorry that we have broken the trust of our customers and the public.”
He has launched an investigation into the device that allowed VW cars to emit less during tests than they would while driving normally.
The German automaker’s shares were down 19% in Frankfurt by lunchtime.
Volkswagen was ordered to recall half a million cars on September 18.
The Environmental Protection Agency (EPA) found the “defeat device” in diesel cars including the Audi A3, VW Jetta, Beetle, Golf and Passat models.
In addition to paying for the recall, VW faces fines that could add up to billions of dollars. There may also be criminal charges for VW executives.
The EPA said that the fine for each vehicle that did not comply with federal clean air rules would be up to $37,500. With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18 billion.
That would be a considerable amount, even for the company that recently overtook Toyota to be the world’s top-selling vehicle maker in the first six months of the year. Its stock market value is about €66 billion ($75 billion).
The company has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of sales.
It has ordered an external investigation, although it has not revealed who will be conducting it.
“We do not and will not tolerate violations of any kind of our internal rules or of the law,” Martin Winterkorn said.
The German government said on September 21 it would rely on the US authorities to assess whether VW had done anything wrong in Europe.
“We expect the car companies to pass on reliable information so that the Federal Motor Transport Authority, the responsible authority in this case, can investigate whether similar manipulations took place with the emissions systems in Germany and Europe,” a spokesman for the German environment ministry said.
The scandal comes five months after former chairman Ferdinand Piech left Volkswagen following disagreements with Martin Winterkorn.
The VW board is due to meet on September 25 to decide whether to renew the chief executive’s contract until 2018.
“This disaster is beyond all expectations,” Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen, said.
VW had been promoting its diesel cars in the US as being better for the environment.
The US law firm Hagens Berman is launching a class-action suit against VW on behalf of people who bought the relevant cars.
The models cited by Hagens Berman are the diesel versions in the US of:
Jetta (2009 – 2015)
Beetle (2009 – 2015)
Audi A3 (2009 – 2015)
Golf (2009 – 2015)
Passat (2014 – 2015)
“While Volkswagen tells consumers that its diesel cars meet California emissions standards, vehicle owners are duped into paying for vehicles that do not meet this standard and unknowingly pay more for quality they never receive,” Hagens Berman alleged.
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